Rental Sitting on the Market

[Benji Halpern]

Hey everyone! About two years ago I invested in my first rental in Denison, Texas and in September closed on my second property in Denison as well. It's been sitting on the market for a little over two months now and I've had some struggle getting much interest. 

The house is clean, great pictures, great listing description, and I think the price is pretty fair. It was originally listed at 1,50 for a 3/1 at ~1,300 square feet, but I just dropped the price to 1,495. Can you help with why the property might be sitting for so long? Is this just a tough time to find new tenants so close to the holidays? Is it worth offering concessions even further?

I've also started looking for my third rental now that prices have come down, but I'm hesitant to start looking without the second one rented. Should I hold off looking for a third rental? 

Thanks in advance! 

[Kyle Hendricks]

The market typically tells you what "fair" rent is. I would say if it is sitting several months and no interest the simple answer is to drop it to where interest starts to generate. $5 a month I don't think is going to do much for most people. 

I always try and remember that for every (1 month rent a unit is vacant divided by 12) you just already lowered rent by that amount. For example in your situation, 2 months empty at 1,500 = 3,000. (3,000 / 12 = $250 a month). So you already lost $250 a month in rent for the year. Which is double the loss of if you would have just rented it day one at $1,375.

Just my thoughts, plus you can always raise rents after 6M or a year to match the market if it picks up. (whatever the lease terms you choose are)

Just one mans thoughts though, best of luck brother and congrats on the 2nd and possibly 3rd unit!